Allied Irish Bonuses ‘Galling’ Amid Budget Cuts, Lenihan Says
Ireland’s Finance Minister Brian Lenihan said it was “galling” that traders at bailed-out Allied Irish Banks Plc sought bonuses as the government slashed spending and raised taxes to narrow the fiscal deficit.
Allied Irish, based in Dublin, yesterday decided not to pay bonuses due to some workers in its markets unit after Lenihan said he may withhold aid for the lender. In an interview with Dublin-based broadcaster RTE today, he said he didn’t want taxpayers exposed to obligations to pay bankers’ bonuses.
Irish banks scrapped bonuses after the government offered in September 2008 to guarantee deposits to avert a run on the country’s lenders during the credit crisis. While Allied Irish said Dec. 9 it was legally bound to pay about 39.2 million euros ($52 million) of bonuses from 2008, Lenihan said laws to block the payment will be discussed by the government today.
“The board of AIB is relieved to be in a position not to pay these bonuses,” Executive Chairman David Hodgkinson said in a statement late yesterday.
Allied Irish was due to pay the bonuses after losing a case in the Irish High Court on Nov. 3. Employee John Foy had sought a bonus of 160,000 euros based on his 2008 performance, which had been due since February 2009, his lawyer told the court.
The bank will meet its obligations under the individual court order, Lenihan wrote in a letter to the bank. Legislation to be voted on tomorrow as part of wider bank resolution will deal with the outstanding bonuses to other workers that have yet to be paid, Marie Mulvihill, a finance ministry spokeswoman, said yesterday.
The state controls about 18.6 percent of the lender after injecting 3.5 billion euros, and is preparing to take a majority stake as Hodgkinson seeks to raise another 9.8 billion euros of capital by February. The government is likely to be left with a stake of about 95 percent, Glas Securities Ltd, a Dublin-based fixed income firm said in a note to clients yesterday.
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